The Central Bank of Nigeria (CBN) has given final approval to the Nigerian branch of Africa’s largest telecom, MTN Nigeria, to run a payment service bank.
A payment service bank also known as PSB is a type of bank that operates on a small-scale with the use of technology services through mobile and agency banking, with a bid to mobilize deposits while facilitating transfers from customers without banks in the trenches and rural areas and all locations that they exist. PSBs also offer payment and remittance services, issue debit and prepaid cards deploy automated teller machines (ATMs) and other technology-enabled banking services.
The CBN had in 2018 proposed the PSB as part of its mandate to impact Nigeria’s financial inclusive drive, with the apex bank asserting that the key objective of setting up PSB will be to enhance financial inclusion, with the increase of access to deposit products and payment remittance services to small businesses, low-income households, and other financially excluded entities, with the use of high volume low-value transactions in a secured technology-driven environment.
With the approval granted MTN Nigeria, the telecom operator will now be able to virtually produce all the services offered by the conventional banks, only that they are not licensed to grant credit and processing foreign exchange transactions.
The CBN had in November 2021 granted an approval in principle to Airtel Africa Plc and MTN Nigeria Communications Plc to operate a payment service bank in the country, but the final approval was subject to the fulfilment of certain standards of the conditions within six months, and MTN Nigeria has successfully surmounted all hurdles to have a final approval, with that of Airtel Africa projected to follow suit.
Nigeria currently has the Africa largest unbanked population, but the West African nation has crawled in mobile money adoption, while lagging behind its regional peers like Ghana and Kenya when it comes to penetration. MTN had in January 2022 revealed that the Nigerian arm of its mobile money service had attracted 9.4 million active users ever since it was launched in August 2019.
The latest approval is expected to spur the adoption of mobile money in the country, with the widespread coverage of MTN helping to serve people all over the country, especially in rural areas, while also positioning the telecom giant as a competitor for the market share and earnings of commercial lenders.
